BARCLAYCARD has cut credit limits for thousands of customers.
The credit card firm, which has millions of customers in the UK, has reduced limits for some of them.
We explain what is happening and how it could affect you.
What is Barclaycard doing?
The credit card firm has been writing to customers to let them know that they are reducing their credit limits.
Customers have been slamming the firm on social media, with some arguing that they have have been loyal customers with good credit scores.
Others are annoyed because they use their credit cards to purchase holidays or expensive items with added protection.
Purchases using a credit card over £100 and under £30,000 are protected under the consumer credit act.
It comes after Barclaycard increased minimum repayments on debts for a fast of customers to help those in “persistant debt”.
Tesco Bank also followed its lead in February this year, raising minimum payments for 125,000 customers.
Tougher regulation introduced in February 2020 by the City watchdog means lenders have to do more to help those in long-term debt repay it.
Struggling customers could have debt interest and charges cancelled under the rules.
Why is Barclaycard reducing limits?
The lender said that it has taken into account the impact of coronavirus on the economy and the ability of some customers to borrow money “effectively”.
A spokesperson said: “Over the past year, we have had to take into account the ongoing economic impact of coronavirus, and this has resulted in an increase in the number of customers receiving credit limit decreases.”
“Having up-to-date credit risk models is part of our commitment to being a responsible lender, to help ensure that customers are not borrowing more than they can comfortably afford.”
Customers can appeal the limit change by verifying their income, if Barclaycard has said they don’t believe their current limit is affordable.
It also said that it will not reduce the current limit below what a customer has borrowed and give them “sufficient headroom” to continue essential spending.
Credit cards: a word of warning
WHY you need to be careful with credit.
With credit cards, you should ALWAYS pay off your balance each month unless you have a 0% interest rate offer and are spreading the payments over a number of months.
If you don’t then you could be paying up to 18% APR.
If you had a balance of £1,000 then it would take you 18 years and three months to pay off the balance and you’d pay £1,204 extra in interest.
You should never borrow more than you can afford to pay back.